Interest Only - Disadvantages?

opinions4u

Dopple wrote: »

We would also like to release equity on the new house and some stage as we don't have any kid.

What for? I don't understand this bit.

getmore4less

Dopple wrote: »

Thanks for the advice. Present situation is this:
Girlfriends house worth about £110k, will get about £60k profit when sold.
Want to move out before it's sold if possible due to neighbour.

New house will be around the £210K-£240k mark, but will rent first if we don't find anything suitable.
We have about £40k deposit we can put into new house, and proceeds from the sale of old house if and when it's sold.
I'm unemployed but have about £110k in savings.
Partner get's about £40k a year from her job.

So we are doing OK and can afford a new house even if old house doesn't sell for a while.
I'm a bit concerned that the mortgage will go from the £350 it currently is to over double that, which is why I asked about interest only.
We would also like to release equity on the new house and some stage as we don't have any kid.

On those numbers you won't get a mortgage it would require a mortgage of £170k-£200k on a £40k salary

If the £110k saving you have is going in then thats a £150K deposit not £40k

Gorgeous_George

opinions4u wrote: »

What for? I don't understand this bit.

Because they don't want to die in credit.

Ideally, they will meet their maker having spent what they have earned rather than leaving it to relatives or the treasury. Makes sense to me. If only we knew the date of death well in advance.

GG

JA1000

We have about £40k deposit
Girlfriends house worth about £110k, will get about £60k profit when sold.
I'm unemployed but have about £110k in savings

Well I make that £210k which is the price of the new house - so no morgage needed. When you need the cash later in life for elderly life, sell the house. Even without kids you may want to stop working.

dunstonh

Because they don't want to die in credit.

1 in 5 will die before retirement. 4 in 5 will live. So, in that respect they may not want to die in credit but they are more likely to end up living in debt.

Gorgeous_George

Which is best - 'dying in credit' or 'living in debt'. There's only one way to find out...


'FIIIIIIIIIIIGHT'

[/harryhillmode]

GG

getmore4less

Gorgeous_George wrote: »

Because they don't want to die in credit.

Ideally, they will meet their maker having spent what they have earned rather than leaving it to relatives or the treasury. Makes sense to me. If only we knew the date of death well in advance.

GG

Thats what annuities are for, someone else takes the risk you could live a long time

Gorgeous_George

getmore4less wrote: »

Thats what annuities are for, someone else takes the risk you could live a long time

What about the opportunity if you die early. They don't take risks that YOU haven't paid for.

My aim is to have sufficient funds to enjoy a high quality retirement to age 75. If I am fortunate to live longer I shall probably need to reduce spending or sell a house, downsize own home etc.

What I don't want to do is fund some financier if I die young.

GG